Granite Group Advisors

Yesterday we attended the Sohn Conference. The foundation was started in memory of Ira Sohn whom passed away from cancer years ago. The organization has contributed over 60 million to cancer research. Many of the speakers are legendary hedge fund managers. They include the likes of David Einhorn, Leon Cooperman, Jeffrey Gundlach, David Tepper and many more. It is consider one of the top investment conferences in the world.

Every year the conference brings together top ideas from stocks to general equity and fixed income views. They are smart, enthusiastic and more right than wrong. This year we noticed a difference, they are all on the same page with very little conflicting views. They all agree that interest rates will go higher, Gundlach said to be out of high yield within a couple of years. They all said the S&P should be higher next year and the Europe was also a good place to be. This complacency has made us nervous.

The markets are trading at what Granite Group believes to be fair to slightly over valued in the short term. Will they be higher next year, we believe so, but not by much. Will interest rates be higher next year, yes, but not by much. So what to do? We are looking for a catalyst to take the market one way or another, but in the meantime be patient and wait for weakness in equity markets to add to positions and strength in yields before adding to fixed income positions.

As always please feel free to call us directly with questions.

As predicted, European indexes are at 14 year highs,  much due to their quantitative easing efforts. The European YTD gains have surpassed their US counterparts, but the returns for US investors were tempered by the strength in the US dollar. We believe that Europe will continue to gain as earnings revisions should remain strong when compared to the weakened revisions in the US.

Historically, QE usually helps equity valuations. The QE European environment has increased valuations and they are getting closer to US valuations. QE should continue to help increase European equity valuations.

Please feel free to call us directly.  You can follow Granite Group Advisors on LinkedIn and learn more about our Wealth Management and Corporate Retirement Services on our Website.

After a volatile quarter, the markets are up slightly on the year.  Many US Economic indicators are pointing to a slowdown in anticipated growth.  Once again the weather is being blamed for much of this slowdown.  However, we believe that the key element to this story is the incredible strength of the U.S. dollar.  The dollar has and will continue to impact the top line revenue of many multinationals.  The S&P earnings forecast for 2015 has already been lowered  from 127 to 119.  A strong US dollar is good for many items like lower oil and gas prices, foreign investment and travel just to name a few, but it also has consequences for companies who export outside the U.S.  While we still expect the U.S. markets to put in a positive year as the S&P breached 2100 on Friday, we continue to look for shorter term weakness to add to positions.

You can follow Granite Group Advisors on LinkedIn and learn more about our Wealth Management and Corporate Retirement Services on our Website.

My mentor in the business always said: eat the meat of the sandwich and let the greedy guys take the crust. This was sage advice 30 years ago, and still holds true today. With the S&P 500 trading at almost 18 times 2015  and 16 times 2016 earnings Granite Group believes the S&P is fully valued. First call estimates have come down from their original earnings forecasts for this year and next. Even though Technicians are calling for higher highs, we believe stock valuations have taken into account most  of the good news.

Our perspective, let the greedy guys have the crust and wait for a better entry point into the markets.

You can follow Granite Group Advisors on LinkedIn and learn more about our Wealth Management and Corporate Retirement Services on our Website.

The market has not been this volatile in years. The intraday 1-2% moves occurring at a higher frequency tells us how skittish investors have become. As we said in December, Granite Group Advisors expected a pullback in January. As of this writing, the S&P’s return is a big fat ZERO.

In an environment such as this we favor different styles of dividend managers, as they will temper volatility. As for fixed income, we believe that shorter term bonds will not do well over the next few years. Additionally, we think absolute return hedge funds would be a good place to lower overall portfolio volatility.

In the short term, once again we would be cautious with new allocations. We are still moderately constructive of the markets for 2015 and continue to see mid to high single digit returns for 2015.

On December 30^th we said there would be a pullback, the S&P is down over 5% since then. We are not saying today’s the bottom, but fundamentally, the S&P has entered Granite Group’s buy zone. That is the good news.

Technically, a break below 1972 on the S&P would lead to further deterioration in the S&P valuation. The S&P long run average is 14.3x earnings. The S&P is trading at 15.8x 2015 and 14.5x 2016 earnings. At the moment, we are trading at a slight premium to the long run average partially due to the 10yr bond hitting new low yields at 1.7%. Oil will have a negative impact on S&P earnings for 2015.

Domestically, Granite Group would feel comfortable buying at these levels, but realize there might be some further downside. The European indexes and Emerging Market indexes are already trading at discount to their historical valuations.

You can follow Granite Group Advisors on LinkedIn and learn more about our Wealth Management and Corporate Retirement Services on our Website.

The US equity market did slightly better than we expected for 2014.   All through 2014, almost every time stocks were at a point of over valuation, we have seen pullbacks. Granite Group feels that the current S&P 500 valuation is slightly overvalued in the short term. We believe that trend should continue which would translate to another pullback coming in January 2015. We are expecting single digit returns in 2015 for the S&P 500.

As for bonds, we expect the Fed to raise short term rates at some point during the year.  The 10 year treasury yield will certainly move a bit higher through the year, which means lower prices on bonds‎.

As always, please consult you advisor before taking any action or we encourage you to call us directly.

Happy New Year!

You can follow Granite Group Advisors on LinkedIn and learn more about our Wealth Management and Corporate Retirement Services on our Website.

Yesterday afternoon, the markets were given an early Christmas gift in the form of dovish comments from the Fed. The Fed said they would not raise rates for a couple of quarters. This, combined with lower oil prices, creates stimulus to personal spending which sent the stock market flying. The recent 5% sell off put stocks in a position where they were back to reasonable valuations and all this good news provided a recipe for a great Christmas gift to the equity markets.

Granite Group believes that equity markets will put in another positive year in 2015.  If the markets slide a bit into year end, there will be more decent entry points. If the markets continue to rise into year end, Granite Group expects a little pullback early in the year setting up another good entry point. Either way, buying on pullbacks is the course of action.

You can follow Granite Group Advisors on LinkedIn and learn more about our Wealth Management and Corporate Retirement Services on our Website.

Thanksgiving and Black Friday sales disappointed, on the whole, as they were down 6.4 percent from a year earlier. We hope Cyber Monday will make up for the retail short fall over the weekend. Retail sales are important because they make up 2/3 of US GDP.  Additionally, oil has dropped to the mid 60’s from June, when oil was over a 100 dollars a barrel. This should add to a family’s disposable income over time and help with retail sales, vacations, etc., but clearly this was not apparent last weekend.

In the short term, we believe the S&P is slightly overvalued trading at 17.6x 2014 and 16.3 times 2015 earnings. Longer term we are constructive, but we do not expect a duplication of the huge S&P returns over the past few years.

You can follow Granite Group Advisors on LinkedIn and learn more about our Wealth Management and Corporate Retirement Services on our Website.

Granite Group Advisors is pleased to announce that we are being considered for the 2015 Retirement Plan Advisor of the Year. Please read below. If your company is interested in employee investment education, professional asset management, directly helping your employee and protecting your fiduciary responsibility, please call me at 203-210-7814.

 Warm regards,

 Lyle

Subject: Nomination for PLANSPONSOR Retirement Plan Adviser of the Year

Hello,

I am pleased to let you know that Granite Group Advisors have been nominated for PLANSPONSOR’s 2015 Retirement Plan Adviser and Adviser Team of the Year awards, and are eligible therefore to be included in the 2015 PLANADVISER Top 100 Advisers list.

Your nomination – whether by a peer, an associate, or a client – illustrates the impact you are already making. However, in order for you to progress further in this process, you must accept this nomination and complete our online entry form, providing our panel of judges with some more information about your business, your experience, and the services you provide.

The 2015 PLANADVISER Top 100 Advisers will be listed in the January-February 2015 PLANADVISER magazine, and profiled on planadviser.com in 2015. The 2015 Retirement Plan Adviser and Adviser Team of the Year awards will be announced at the annual PLANSPONSOR/PLANADVISER Awards Dinner in New York City. Finalists and winners will be profiled in upcoming issues of PLANSPONSOR and PLANADVISER.

I congratulate you on your nomination – and look forward to learning more about your practice.